JetBlue has submitted a competing offer to Spirit Airlines' board of directors in hopes of wooing the ultra-low-cost carrier away from its merger deal with Frontier Airlines.
Under its proposal, JetBlue would acquire Spirit for $3.6 billion, or $33 per share in cash, which it said was a 50 percent premium to Spirit's April 4 closing share price and a "superior proposal" to the merger agreement with Frontier announced in February. Frontier's offer was for about $2.9 billion in cash and stock.
JetBlue CEO Robin Hayes in a statement said the acquisition would be a "game changer" in terms of the carrier's ability to compete on a national scale. Combined with Spirit, JetBlue's fleet would be 455 aircraft with 312 Airbus aircraft on order and would bring new destinations to JetBlue's network including St. Louis; Memphis; Louisville, Ky.; Atlantic City, N.J.; Myrtle Beach, S.C.; and four destinations in Colombia.
"While JetBlue and Spirit are different in many ways, we also have much in common, including a focus on keeping our costs low so we can profitably expand and offer an attractive alternative to the dominant 'Big Four' airlines," according to Hayes. "We would conduct a full review of Spirit's product offering, operational and customer technology and talent pool to optimize the combined airline."
Spirit in a statement acknowledged the "unsolicited proposal" and said it "will work with its financial and legal advisors to evaluate JetBlue's proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders."
Frontier, meanwhile, maintained that its offer, which it had hoped to close in the second half of this year, was "in the best interest of consumers and shareholders." A Frontier spokesperson indicated a JetBlue-Spirit merger would attract more antitrust scrutiny from the U.S. Department of Justice, which is already challenging its partnership with American Airlines.
"Unlike the compelling Spirit-Frontier combination, an acquisition of Spirit by JetBlue, a high-fare carrier, would lead to more expensive travel for consumers," the Frontier spokesperson said. "In particular, the significant East Coast overlap between JetBlue and Spirit would reduce competition and limit options for consumers."